Periscope is a cell phone application that allow users, to stream live events. That is, when an event is occurring, the user simply activates the app and transmits the event via the cell phone. Periscope is not intended to record for future use; rather, it is intended to broadcast live as an event is happening.

Recently, concerns were raised regarding the Mayweather/Pacquiao fight, which was a pay per view event. Many Periscope users, who purchased the fight for viewing, streamed the event via the Periscope app, thereby allowing everyone using the app to see the fight for free. Dick Costolo, Twitter’s founder, declared the real winner of the fight to be Periscope. Periscope, a Twitter owned company, issued a statement that they would abide by any properly issued “take down requests.” However, because the event is being streamed live, by the time any request is made, it would likely be too late. HBO has encountered similar problems with Periscope users streaming its popular show, Game of Thrones. Although HBO filed such notices alleging copyright infringements with regard to the unauthorized live streaming of Game of Thrones, likely recognizing the inherent problem in effectively policing live streaming infringements, an HBO spokesman stated “[i]n general, we feel developers should have tools which proactively prevent mass copyright infringement from occurring on their apps and not be solely reliant upon notifications.”

This development has caused other exclusive events to raise their eyebrows. For instance, the Cannes Film Festival weighed in with concerns as they offer world premieres of films that are unavailable to film-goers until much later. Although streaming on Periscope, and other similar live streaming apps such as Meerkat, does not provide the best viewing quality of the event, the ability to disrupt the exclusivity of the events remains a concern. Indeed, Twitter’s commitment to fighting piracy has been questioned in light of Dick Costolo’s declaration that the real winner of the fight was Periscope. A comment such as this fails to instill confidence that the company is truly committed to preventing copyright infringement. Indeed, the current lack of any preventative measures by the app developers against copyright infringement seems to support the view that the policing of infringement will rest solely on the copyright owner.

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 946-2300, or email her at anna@apogeelawgroup.com. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

]]>https://amviplaw.wordpress.com/2015/06/04/periscope-a-threat-to-market-exclusivity-and-copyrights/feed/0amviplawServices Must Be Rendered, Not Merely Available, To Support The Registration of A Trademarkhttps://amviplaw.wordpress.com/2015/06/03/services-must-be-rendered-not-merely-available-to-support-the-registration-of-a-trademark/
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On March 2, 2015, in a case of first impression before the Federal Circuit, the Court directly addressed “whether the offering of a service, without the actual provision of a service, is sufficient to constitute use in commerce under Lanham Act § 45, 15 U.S.C. § 1127.” The Court said no.

In 2008, David Couture filed a trademark application for PLAYDOM for writing and production services. As part of the use based application pursuant to Lanham Act. § 1(a), Couture submitted a screenshot of a web page bearing the trademark to the United States Patent and Trademark Office (USPTO) as proof of use of the mark in connection with the identified services. That page simply had the PLAYDOM name and stated “[w]e are proud to offer writing and production services for motion picture film, television, and new media.” The USPTO approved the application in 2009, but no services were actually provided until 2010.
One month after PLAYDOM’s application was approved, Playdom, Inc. (a different company) filed a trademark application for the identical trademark, PLAYDOM. The new application for PLAYDOM was refused based on the Couture application for PLAYDOM. In response to the refusal, Playdom sought cancellation of Couture’s now issued registration for PLAYDOM before the Trademark Trial and Appeal Board (“TTAB”). Despite Couture’s belief that the availability of the services was sufficient to support the claim of use, the TTAB granted the cancellation of the Couture registration stating that Couture “‘had not rendered his services as of the filing date of his application'” because he had “‘merely posted a website advertising his readiness, willingness and ability to render said services.'” (emphasis added) Accordingly, the original application was void ab initio. Couture appealed to the Federal Circuit, which upheld the decision of the TTAB.
In discussing its decision, the Federal Circuit noted that in its prior decision, Aycock Eng’g, Inc. v. Airflite, Inc., 560 F.3d 1350, 1357 (Fed.Cir.2009), it stated that “[a]t the very least, in order for an applicant to meet the use requirement, there must be an open and notorious public offering of the services to those for whom the services are intended.” The Federal Circuit, however, went on to clarify that it did not suggest in Aycock that an open and notorious public offering alone is sufficient to establish use in commerce. Rather, the Federal Circuit stated that the “statute is clear that a mark for services is used in commerce only when both [1] ‘it is used or displayed in the sale or advertising of services and [2] the services are rendered.'” 15 U.S.C. § 1127 (emphasis added). Thus, in the Couture case, the mere advertising of a service “that the applicant intends to perform in the future will not support registration.”
The Couture decision emphasizes the importance of proper trademark use at the time of filing to support a resulting trademark registration. Since the Couture application was based on use, the trademark had to have been in acceptable use on the date the application was filed. If there is no use on the filing date of an application, the application can be filed based on an-intent to use the trademark, wherein once perfected, trademark rights are protected as of the filing date. As seen from this case, the consequences for failing to file the appropriate application can be catastrophic.
Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 946-2300, or email her at anna@apogeelawgroup.com. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

In Brulotte v. Thys Co., 379 U.S. 29 (1964), the Supreme Court drew a bright line rule that royalty payments beyond the expiration of a patent were unlawful. However, many think that a case involving Spider Man might be the undoing of that case.

In Kimble v. Marvel Enterprises, 727 F.3d 856, 857-58 (9th Cir. 2013), Kimble invented a glove that allows the shooting of foam string from the hand, like Spider Man. Kimble approached Marvel and discussed the idea covered by the then-pending application, and other “ideas and know-how.” Marvel declined participation in the toy and other ideas, but according to Kimble, verbally agreed to compensate Kimble should Marvel use any of the discussed ideas. Some time later, Marvel introduced the “Web Blaster,” a product that was similar to Kimble’s and which allowed the user to shoot foam string from a can mounted on the wrist. Kimble brought suit. The court granted Marvel summary judgment on the patent infringement claims, but a jury later found in Kimble’s favor on the contract claims. While on appeal, the parties reached a settlement, wherein Marvel agreed to buy Kimble’s patent for a lump-sum payment and further agreed to a 3% royalty on “net product sales,” which included products that would otherwise have infringed the patent, as well as, Web Blaster sales. The settlement agreement and the royalty obligations had no expiration date. Marvel ceased payments after the patent expired.

Kimble filed suit for breach of contract. The trial court held that the royalty provision was unenforceable after the expiration of the patent, citing Brulotte. Kimble appealed and the Supreme Court granted certiorari.

The decision will have a far-reaching effect, for example, as in the life sciences industry where new drug products often come to market late in the 20 year patent term. Supporters of Brulotte contend that problems, such as the term of the patent, should be addressed by Congress, while those supporting overturning Brulotte, contend that more flexibility in negotiations is of greater importance than maintaining a rigid rule. The decision will either maintain a 50 year status quo, or could substantially offer new avenues in negotiations regarding patented technology and products.

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 946-2300. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

The Obama Administration is currently negotiating with 11 other nations across the Pacific Rim, which account for 40 percent of the global gross domestic product, to form the Trans-Pacific Partnership Agreement (TPP). In some ways mirroring NAFTA, the TPP purports to level the playing field with regard to trade and tariffs among the member nations by creating uniform standards. It also opens the door for corporations to file suit against governments whose trade restrictions harm their business. Those suits would be held in an investor-state dispute tribunal designated by the World Bank or the United Nations.

The TPP negotiations are largely being conducted secretly, but the New York Times, via WikiLeaks, obtained a draft of the proposal. Based on the leaked documents, there are criticisms from both the political left and right. Both sides complain that even local regulations would be subject to an international tribunal for resolution.

Supporters, including the United States Trade Representative, believe that the concerns are overblown. That is, under NAFTA, which has a similar provision, there have been only 17 investor state cases, and the United States has prevailed in each case.

Of concern to Intellectual Property attorneys and innovators is the language in the TPP that “proposes to give private companies the ability to enforce public international law whenever a local regulation ‘either directly or indirectly’ expropriates any ‘investment.’ (Art. 11.7). The term ‘indirectly’ opens the process to consideration of what in U.S. constitutional law is referred to as a ‘regulatory taking’ – that is a regulation or regulatory action that diminishes the value of property, even if the government does not take ownership of the property.” The “directly or indirectly” language could potentially give the tribunals the power to overturn decisions made in national courts based on an interest held by an international corporation operating domestically.

Some contend that these regulations, as proposed, would hinder global innovation. Dr. Robert Atkinson, President of the Innovation Technology and Innovation Foundation, asserts that the solution lies in binding the member states to the United States’ method of IP protection through “proper patent, copyright and trade secret protections, effective mechanisms to prevent counterfeiting and digital piracy, as well as 12 years of data protection for innovative and incredibly complex biologic medicines.” Dr. Atkinson indicates that such intellectual property protections in the TPP have broad support both in Congress as well as the business community. The final provisions remain to be seen.

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 946-2300. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

Wheeler agreed with President Obama’s proposal to regulate Internet traffic as a public utility, but he went a step further. He proposed utilizing the FCC’s Title II powers under the Telecommunications Act to “ban paid prioritization, and the blocking and throttling of lawful content and services (and)… to fully apply-for the first time ever-those bright-line rules to mobile broadband.”

Wheeler’s plan would also “for the first time give the F.C.C. enforcement powers to police practices in the marketplace for the handling of data before it enters the gateway network into people’s homes – the so-called interconnect market. For good measure, he added a ‘future conduct’ standard to cover unforeseen problems.”

Although the FCC’s ruling comes as a victory in maintaining the openness and level playing field in providing Internet services, it remains to be seen whether this ruling will be challenged in court, or whether new legislation will be introduced in an attempt to ‘gut’ the FCC’s ruling.

In a related matter, on February 20, a bi-partisan bill was introduced to the Senate that would permanently ban taxes on high-speed Internet service to American customers. A similar bill passed the House of Representatives last year.

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 946-2300. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

]]>https://amviplaw.wordpress.com/2015/04/07/fcc-chair-approves-strong-net-neutrality-rules/feed/0amviplawTrademark vs. Mass Exposure: The Sriracha King Takes a Bold Positionhttps://amviplaw.wordpress.com/2015/04/06/trademark-vs-mass-exposure-the-sriracha-king-takes-a-bold-position/
https://amviplaw.wordpress.com/2015/04/06/trademark-vs-mass-exposure-the-sriracha-king-takes-a-bold-position/#respondMon, 06 Apr 2015 19:07:35 +0000http://amviplaw.wordpress.com/?p=73Continue reading Trademark vs. Mass Exposure: The Sriracha King Takes a Bold Position→]]>Vietnamese immigrant David Tran began selling his Asian chili “sriracha sauce” under the Huy Fong Foods brand in 1980. Recently, that sauce has become a hot property among foodies, with Bon Appetit magazine once naming it the ingredient of the year. The apparent popularity of this ingredient has not gone unnoticed as numerous other food companies have been capitalizing on the sriracha sauce trend by adding it to their products, notably Frito-Lay, Heinz, and Subway.

While most companies with successful products fiercely protect their trademarks, Tran opted to forego seeking trademark protection for the sriracha name, choosing instead to only seek trademark protection for the unique green topped bottle and the rooster logo. To some marketing executives, the choice is a fundamental misstep, but Tran stands behind his decision citing mass exposure and “free advertising” as a key to his brand’s success. The numbers seem to favor Tran’s argument, with sriracha sales increasing from $60 million to $80 million in the last two years.

Either way, the ship appears to have sailed for Tran on the trademark issue, and actually may have in 1990 when Tran’s ‘rooster logo application’ was filed. In that application, the word SRIRACHA was disclaimed, meaning it was found to be a merely descriptive or generic term in relation to the goods identified in the application. While the history of the rooster logo application prior to registration is not accessible online, the fate of this word may have been sealed in that application, which identified the goods as ‘hot chili sauce; namely, Sriracha Hot Chili Sauce’. This description likely provoked the disclaimer requirement, which has been continued in future applications.

Currently, there are over 24 trademark applications for marks that include the term SRIRACHA, most in association with food or food related services. Of the few that have registered, each was required to disclaim the term SRIRACHA, meaning the Trademark Office is of the opinion that the term is merely descriptive or generic in association with identified goods. Assuming the term ‘sriracha’ was protectable at one point in time, had Tran filed a trademark application for “sriracha” earlier, he may have been able to protect it as a brand of chili sauce, thereby giving him the ability to prevent its use by third parties.

Although Tran seems to be benefitting from the current third party use, Tran may have reason to worry. While there are a number of companies currently selling sriracha style sauce, the makers of Tabasco®, sauce giant McIlhenny Co., is entering the sriracha market, with a vast advertising budget and superior distribution outlets. Should McIlhenny flood the market with its own ‘sriracha’ product, Tran may find that his strategy backfired in decreased profits and market shares. For the time being, McIlhenny admits Tran “got an awful big head start.”

If history is any indicator of the future, it is likely that the term “sriracha” will eventually cease to function as any form of advertising for Mr. Tran exclusively, but will instead, likely be viewed simply as a type of delicious chili sauce. The term is likely to go the way of other terms like “escalator” and “aspirin” that have ceased to be associated exclusively with a single company. Indeed, by allowing numerous other companies to create and market a sriracha sauce, Mr. Tran has all but insured that his original sriracha sauce will soon be but one among many in a vast ocean of sriracha sauces. The sad result of Mr. Tran’s failure to protect his brand may be that the substantial competitive advantage he once possessed may soon be thoroughly neutralized and overshadowed by other companies more intent on building and protecting the brands associated with their products.

Ultimately, the test of Tran’s choice will pass to the consumers. Will sriracha customers remain loyal to Tran and his Huy Fong product that invented the flavor profile and caused the sensation, or will they bow to McIlhenny’s accessibility and name recognition?

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 946-2300. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

]]>https://amviplaw.wordpress.com/2015/04/06/anna-vradenburgh-new-contact-information/feed/0amviplawSupreme Court to Consider Whether A Party’s Good-Faith Belief of Patent Invalidity Should Have Been Heard at Trialhttps://amviplaw.wordpress.com/2015/01/31/supreme-court-to-consider-whether-a-partys-good-faith-belief-of-patent-invalidity-should-have-been-heard-at-trial/
https://amviplaw.wordpress.com/2015/01/31/supreme-court-to-consider-whether-a-partys-good-faith-belief-of-patent-invalidity-should-have-been-heard-at-trial/#respondSat, 31 Jan 2015 17:04:44 +0000http://amviplaw.wordpress.com/?p=69Continue reading Supreme Court to Consider Whether A Party’s Good-Faith Belief of Patent Invalidity Should Have Been Heard at Trial→]]>

On December 5, 2014, the United States Supreme Court granted certiorari in Commil USA, LLC v. Cisco Systems, Inc. to determine whether the U.S. Court of Appeals for the Federal Circuit erred in holding that a defendant’s “good-faith” belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b). Section 271(b) states that “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” 35 U.S.C. 271(b).

Commil USA, LLC (“Commil”) developed and patented technology that allows wireless devices to move through a communication network, for example, between wifi spots or base stations, without signal interruption. Commil filed suit against Cisco alleging that Cisco’s wifi products directly infringed its patent, and that Cisco had induced others to infringe its patent. The trial court found that Cisco had directly infringed the patent, but did not find Cisco liable for inducing third parties to infringe.

Commil filed and won a motion for new trial on the issue of induced infringement. In the second trial, the jury ruled in favor of Commil on the issue of induced infringement. During the second trial, Cisco was prevented from introducing evidence related to Cisco’s good-faith belief that the Commil patent was invalid. Cisco appealed, and the Federal Circuit found that Cisco should have been allowed to introduce evidence of its good-faith belief that the Commil patent was invalid. Both parties appealed to the United States Supreme Court, which ultimately granted certiorari on the sole issue of whether a party’s good-faith belief that a patent is invalid will operate as a defense to a finding of inducement, thereby relieving that party of liability for infringement. Click here for source.

The resolution of this issue by the Supreme Court is important in that it could eliminate liability of a party that encourages third parties to act in a manner that infringes a patent, even in instances where the actions of the third parties infringe the patent. However, until this case is decided, it is unclear whether even an opinion of counsel that a patent is invalid would protect a party against a finding of inducing infringement in instances where the patent is found to be valid.

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 488-8146. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

Various governments in the European Union have enacted copyright laws intended to restrict search engines, such as Google, from displaying links to news organizations’ content, alleging that it constitutes copyright infringement.

In 2013, Germany was the first to enact such a law, the Leistungsschutzrecht für Presseverleger, alleging that the search engines benefitted from the free use of news organizations’ content. The final version of the law, however, did not require search engines to pay for using ‘snippets’ of content. Several media groups filed suit against Google, contending that it should be required to pay.

Google responded to the lawsuit by refusing to display the content of the media groups involved in the lawsuit. This action apparently led to disastrous consequences for the media groups resulting in a dramatic decrease in web traffic to those news outlets’ sites. Apparently, Google’s strategy worked, as the complaining news outlets reconsidered and granted Google “consent” to use their snippets without compensation, due to the “overwhelming market power of Google”. http://techcrunch.com/2014/10/23/kapitulation/

A year later, Spain enacted similar legislation, known as the “Google tax,” which requires search engine aggregators to pay a monthly fee to the organization representing Spanish newspapers, the Association of Editors of Spanish Dailies, or face a fine up to 600,000 Euros. Spain’s legislation reaches further than Germany’s, however, subjecting any website to the fine regardless of whether they profit from the links to the news organizations’ content.

The news organizations contend that the search engines profit from their content without actually doing any news gathering. Google, on the other hand, counters that it brings millions of visitors to the news websites. The German reaction after Google removed the content seems to bear out Google’s position. Ultimately, Google opted to shutter its Google News outlet in Spain prior to the January 1, 2015, enforcement date of the legislation. http://www.theguardian.com/technology/2014/oct/31/spain-newspaper-google-tax

Weighing in on the matter is incoming European Union Digital Commissioner, Günther Oettinger, who has recently said that an EU-wide tax on Google and other similar companies, similar to that enacted in Germany, is definitely on the table. http://www.euractiv.com/sections/innovation-enterprise/oettinger-floats-proposal-eu-wide-google-tax-309568 This news comes on the heels of the EU Parliament voting, in an antitrust action, to effectively break up Google, dividing the monolith into a search engine entity and the remainder of its products, after a finding that Google favored its own products in its search engine results. The vote is a paper tiger, in that it has no effect. However, most believe that Parliament was sending a signal to the European Commission, which does have that power. The United States has opposed such a move. http://www.neowin.net/news/european-parliament-votes-to-break-up-google

The EU’s rationale became clear as Oettinger indicated that the ultimate goal is to create a single digital market across the Union in order to create a level playing field. Oettinger said, “if they are playing in our European market then we have some instruments to come to a guarantee that they are acting on the basis of our rules.” A decision as to how the EU will proceed is expected by May of 2015. http://www.wsj.com/articles/eu-considers-taxing-google-other-u-s-internet-firms-1421699055

If you have questions about copyright laws, you need an experienced attorney. Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 488-8146. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

]]>https://amviplaw.wordpress.com/2015/01/30/european-governments-seek-to-tax-search-engines-under-copyright-law/feed/0amviplawFTC Settles Patent Troll Casehttps://amviplaw.wordpress.com/2015/01/02/ftc-settles-patent-troll-case/
https://amviplaw.wordpress.com/2015/01/02/ftc-settles-patent-troll-case/#respondFri, 02 Jan 2015 21:22:59 +0000http://amviplaw.wordpress.com/?p=64Continue reading FTC Settles Patent Troll Case→]]>Over the last decade an increasing number of businesses have been plagued by the activities of patent assertion entities, commonly known as “patent trolls.” Simply put, a patent troll is an entity that exploits patent rights it has acquired, not by practicing the patent (e.g., by actually using the patented technology), but instead by collecting licensing fees from parties the patent troll alleges has infringed the patent. Indeed, hundreds, if not thousands of companies have encountered patent trolls, such as, Acacia Research Corporation, in recent years.

Recently, the activities of one such patent troll, MPHJ Technology Investments, resulted in an action by the Federal Trade Commission (FTC). Through investigation of MPHJ, the FTC determined that MPHJ had sent more than 15,000 cease and desist letters to small businesses around the country alleging the infringement of patents that involved scanned documents that were then emailed. The letters demanded a hefty licensing fee of $1,000-$1,200 per employee, and further warned that if the business did not comply with MPHJ’s demands, it would face a lawsuit. The letters further represented that there had already been substantial licensing of the patents, in some instances, referencing specific amounts of the licensing fees that were allegedly paid.

The FTC order was directed to the sole executive of MPHJ, Jay Mac Rust, and a local Georgetown, Texas law firm Farney Daniels. The FTC contends that Farney Daniels stood to profit from a percentage of any license fees paid. Rust allegedly purchased a handful of patents from the prior owner, another “patent troll”, and began asserting the patents by demanding licensing fees. After state consumer protection regulators in New York, Vermont, and elsewhere began responding to complaints about the company, the FTC began an investigation into MPHJ’s activities. The result was the FTC’s disclosure that it intended to file an administrative complaint against MPHJ alleging deceptive trade practices under Section 5 of the FTC Act.

The basis of the FTC’s allegations of deceptive trade practices originates from the cease and desist letters sent by MPHJ. The FTC alleged that MPHJ had no intention of actually suing the companies, and that MPHJ did not enter into prior patent licensing agreements as it represented in the letters. Accordingly, the FTC alleged that MPHJ was engaged in deceptive business practices in violation of the FTC Act. In response, in January 2014, MPHJ filed a suit against the FTC in the U.S. District Court for the Western District of Texas alleging, inter alia, that under the First Amendment, it had the Constitutional right to assert its patents on the grounds of free speech, and was obligated to do so to protect its patent rights.

Last month, the FTC announced that it had reached an undisclosed settlement with MPHJ. The proposed consent order sets forth an agreement by MPHJ, Farney Daniels, and MPHJ’s owner, Jay Mac Rust, to refrain from making deceptive representations when asserting patent rights, including the making of “false or unsubstantiated representations that a patent has been licensed in substantial numbers or has been licensed at particular prices.” The proposed order further prohibits misrepresentations regarding the initiation and imminence of a lawsuit. According to a New York Times article, MPHJ contends that “Under the agreement, MPHJ continues to have the right to enforce its patents by contacting companies suspected of infringement, and there is no restriction impairing MPHJ’s right to enforce its patents.”

To date, only two companies have reportedly paid MPHJ’s licensing fees. And perhaps that fact best demonstrates why businesses contacted by a patent troll are well advised not assume the worst, but instead, should calmly seek the advice of experienced intellectual property counsel.

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues. As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation. Anna can also assist your company in all manner of intellectual property protection. For more information, visit her website, or contact Anna at (818) 488-8146. This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.